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Economics
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28 Oct 2020

9. In the case of pollution(a negative externality), at the market output, 

a. social benefits of consumers exceed the social costs of production.

b. private costs of production exceed the private benefits to consumers.

c. private costs of production exceed the social benefits to consumers.

d. social costs of production exceed social benefits to consumers.

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Microeconomics
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Defining Negative Externality
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Raushan Raj
Raushan RajLv8
28 Oct 2020

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Related questions

How do externalities affect markets?

If a positive externality in consumption is present in a market, then

a. the market will achieve economic efficiency.

b. the private benefit from consumption will be different than the social benefit from the consumption.

c. the private cost of production will be equal to the private benefit from the consumption.

d. the social cost of production will be equal to the social benefit from the consumption.

e. the private cost of production will be different than the social cost of production.

Suppose electricity generates a negative externality in production.
If​ so, then
the marginal social cost of electricity equals the marginal social benefit.
the marginal social cost of electricity equals the marginal private cost.
the marginal social cost of electricity is greater than the marginal private cost.
the marginal social cost of electricity is less than the marginal private cost.

The marginal social benefit of a good that exhibits positive externalities is ( greater or less than ) the private social benefit of that good.

Why?

A. When a trade causes positive externalities, the marginal social benefit equals the marginal private benefit minus the costs incurred by third parties not involved in the trade.

B.When a trade causes positive externalities, the marginal social benefit equals the marginal private benefit plus the benefits received by third parties not involved in the trade.

C.When a trade causes positive externalities, the marginal social benefit equals the marginal private benefit plus the costs incurred by third parties not involved in the trade.

D. When a trade causes positive externalities, the marginal social benefit equals the marginal private benefit minus the benefits received by third parties not involved in the trade.

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